As someone who has seen the devastating impact of not having life insurance, I cannot stress enough how important it is to have a plan in place. The reality is that life is unpredictable, and even the healthiest person can face unexpected health issues or accidents. That’s where LIC Term Insurance comes in.
LIC Term Insurance
LIC Term Insurance is a type of life insurance policy that provides coverage for a specific period (term) of time. It pays out a death benefit to the beneficiary if the policyholder passes away during the term. Unlike other types of life insurance policies, term insurance does not have any cash value or investment component.
Importance of Having Life Insurance
Having life insurance is essential for anyone who has loved ones depending on them financially. If you were to pass away unexpectedly, your family would be left with not only emotional loss but also financial burdens such as funeral expenses and outstanding debts.
Without an adequate financial safety net in place, your loved ones may have to struggle to make ends meet. Investing in a life insurance policy can provide peace of mind knowing that your family will not be left financially vulnerable in case something happens to you.
Overview of the Benefits of LIC Term Insurance
LIC Term Insurance offers several benefits that make it an attractive option for those looking for affordable and straightforward coverage: Low Premiums: One of the most significant advantages of term life insurance policies like LIC Term Insurance is their affordability compared to other types of policies.
Since there’s no cash value or investment component involved, premiums are lower which makes it more accessible for people on tighter budgets. Flexibility: Another advantage is that LIC Term Insurance allows policyholders to customize their policies according to their needs.
They can choose the coverage amount and term duration based on their financial goals and the needs of their dependents. Death Benefit: In case of an unexpected death, the death benefit payout from LIC Term Insurance policy can provide a financial cushion for beneficiaries, helping them pay off debts and cover other expenses.
Tax Benefits: LIC Term Insurance offers tax benefits under sections 80C and 10 (10D) of the Income Tax Act. Policyholders can claim a deduction for premiums paid up to Rs.
1.5 lakh from taxable income under section 80C. Additionally, any payout received by beneficiaries is exempted from tax under Section 10(10D).
LIC Term Insurance is an affordable and convenient way to secure your family’s future financially in case something unexpected happens to you. The peace of mind provided by having life insurance is worth the investment in my opinion, especially considering how affordable it can be with LIC Term Insurance.
The Basics of LIC Term Insurance
What is term insurance?
Term insurance is a type of life insurance policy that provides coverage for a specific period of time, known as the term. If the policyholder dies during the term, their beneficiaries are paid a death benefit.
Unlike whole life or endowment policies, term insurance policies do not have any savings component and are designed solely to provide financial protection to one’s loved ones in case of an unforeseen event. Term insurance is an affordable way to secure one’s family’s future.
It is also easy to understand and purchase as there are no complicated investment decisions involved. However, some people argue that it is wasteful to spend money on a policy that does not accumulate cash value over time.
How does LIC Term Insurance work?
LIC Term Insurance works just like any other term insurance policy. A person buys a policy by paying regular premiums for a specific period called the “term.” In case of the policyholder’s untimely demise during this period, their beneficiaries receive a lump sum amount known as the death benefit.
LIC offers flexible options for premium payment and policy duration, so you can choose what suits your needs best. Additionally, LIC offers riders or add-ons such as accidental death benefits or critical illness coverages at an extra cost.
While there are several advantages of buying LIC Term Insurance over policies offered by other insurers, they are not without their limitations. For example, unlike some private insurers which offer online quote calculators that help customers determine their premium amounts based on factors like age and income, LIC still relies on traditional methods for calculating premiums which can make it inconvenient for some customers.
Types of term insurance policies offered by LIC
LIC offers several types of term insurance policies tailored to different needs:
- LIC Tech Term: A policy designed for individuals who are tech-savvy and prefer a completely online process. It offers a death benefit as well as an accidental death benefit.
- LIC e-Term: This is also an online policy that offers a high sum assured at a low premium rate. It is available for purchase up to the age of 60 years.
- LIC Jeevan Amar: This term plan has proved to be the most popular product among customers. It offers coverage up to the age of 80, flexibility in payment options, and riders or add-ons like critical illness coverage.
- LIC Anmol Jeevan II: A policy suited for people who need long-term protection but are on a budget. The premiums are lower than other term plans, making it affordable for most income groups.
Each of these policies has its own unique features and benefits, so it’s important to assess your needs carefully before choosing one. Overall, LIC Term Insurance offers several advantages such as affordability, flexibility in policy duration and coverage amount, tax benefits under Section 80C and Section 10(10D), among others.
However, it may not be suitable for everyone. It’s important to weigh the advantages against the disadvantages before making a decision that best suits your needs.
Advantages and Disadvantages of LIC Term Insurance
Advantages:
If you’re considering buying term insurance, LIC should definitely be on your list. There are several advantages to choosing LIC as your insurance provider. In fact, I would go as far as saying that they are one of the best in the industry.
Affordable premiums
One of the biggest advantages of buying LIC term insurance is that their premiums are affordable. This means that you can get a high amount of coverage without having to spend a lot of money on your premiums. This makes it accessible for everyone who wishes to secure their family’s future.
Flexibility in policy duration and coverage amount
LIC offers flexibility when it comes to selecting the policy duration and coverage amount. You can choose any policy duration between 5 years and 40 years, according to your needs. Similarly, you can select a coverage amount which is suitable for your family’s requirements.
Tax benefits under Section 80C and Section 10(10D)
Under Section 80C of the Income Tax Act, premiums paid towards life insurance policies are eligible for tax deductions up to Rs.1.5 lakhs per annum. Additionally, under Section 10(10D), death benefits received from a life insurance policy are exempt from tax.
Disadvantages:
While there are several advantages to buying LIC term insurance, there are also some disadvantages that one must keep in mind before making a decision.
No savings component like endowment policies
Unlike an endowment policy where some portion of the premium is invested in funds which accumulate over time providing returns, term insurance policies do not have any savings component. This means that if you survive the policy term, you do not receive any maturity benefits.
Premiums increase with age
The premiums for LIC term insurance policies increase as you age. This is because the likelihood of death increases with age and the insurance provider needs to cover this risk by charging higher premiums.
While this is a common practice in the industry, it can be a disadvantage for those who wish to continue their coverage beyond a certain age. All in all, LIC term insurance is an excellent choice for those who want affordable and flexible coverage.
The tax benefits are an added bonus which make it even more attractive. However, if you’re looking for an investment option or if you plan on continuing your coverage beyond a certain age, then it might not be suitable for you.
Understanding the Claims Process for LIC Term Insurance
Death Benefit Claims: The Devil is in the Details
Filing a death benefit claim under a LIC term insurance policy is not as straightforward as you may think. Claimants must provide proof of death, which requires submitting copies of medical records, death certificates and other documents. And even then, there’s no guarantee that the claim will be paid out.
LIC has been known to reject claims on grounds of inaccuracies or discrepancies in documentation. It’s essential that you educate yourself on all of the requirements and procedures if you expect to receive payment.
The Waiting Game: LIC’s Time Frame for Claim Settlement
Another hurdle in the claims process is the time frame for settlement. In some cases, it can take weeks or even months for a death benefit claim to be processed and paid out by LIC.
If your loved ones are depending on that payout to cover expenses such as funeral costs or mortgage payments, that delay could be detrimental. It’s important to consider this when choosing an insurer.
Additional Features and Riders Available with LIC Term Insurance
No Accident: Get an Accidental Death Benefit Rider
If you want extra protection beyond your basic term life insurance policy, consider an accidental death benefit rider from LIC. This type of rider can provide additional benefits if the policyholder dies due to an accident rather than natural causes.
Critical Illness Rider: More Comprehensive Coverage
A critical illness rider can be added to an LIC term insurance policy to provide additional coverage if you become seriously ill with one of the illnesses specified in your policy (such as cancer). Depending on your needs and circumstances, this rider may be worth considering.
The Waiver of Premium Rider: When You Can’t Pay Your Premiums
If you become unable to pay your premiums due to disability or illness, the waiver of premium rider can be a lifesaver. It allows you to continue your policy without paying premiums for a specified period. It’s important to note that this rider typically comes at an additional cost.
Frequently Asked Questions about LIC Term Insurance
Who Can Buy a Term Insurance Policy from LIC?
LIC offers term insurance policies to Indian citizens and non-resident Indians (NRIs) between the ages of 18 and 65. There are some restrictions based on age and health status, so it’s important to check with LIC directly if you have any questions.
What is the Minimum and Maximum Sum Assured Under a Term Insurance Policy from LIC?
The minimum sum assured for LIC term insurance policies is ₹50,00,000 ($68,000 USD). The maximum sum assured varies depending on factors such as age, health status and income level.
Conclusion
While there are some potential pitfalls when it comes to filing a claim or choosing additional features for your term insurance policy with LIC, overall they offer strong protection at an affordable price. Just make sure you do your research before making any decisions. In an unpredictable world, having the peace of mind that comes with proper life insurance coverage is priceless.
